Writing for the majority on the ACA ruling, Justice Breyer:

“We do not reach these questions of the Act’s validity, Texas and the other plaintiffs in this suit lack the standing necessary to raise them.”

The lack of standing comes from:

“The states having brought the suit could not show that they will suffer any injury from the fact that some form of the mandate is still in effect, and threw out the lawsuit as a result.”

In the majority were Chief Justice John Roberts and Justices Clarence Thomas, Sonia Sotomayor, Elena Kagan, Brett Kavanaugh and Amy Coney Barrett.

In dissent, Justice Samuel Alito, joined by Justice Neil Gorsuch, accused the majority of ducking the constitutional issues that conservatives for years have argued make the federal healthcare overhaul unconstitutional.

More later:

Still a developing report and waiting on additional emerging details.

CALIFORNIA ET AL. v. TEXAS ET AL.

Why Are Infrastructure Costs So High In The US?

Sorry, but anybody wanting some simple answer on this one, especially an ideologically neat one, sorry, there is not one, Indeed, on this important issue, there is a large problem, but not remotely a clear answer regarding why there is this large and important problem.

For numbers on this problem, I draw on a Washington Post column yesterday by Catherine Rampell. Here are some of the crucial data. In the early 1930s, just to pick one major infrastructure project, the Oakland-Bay bridge was approved and built within four months.  Yeah, the Great Depression.  But now compared to Europe, where supposedly they have higher labor costs and more regulations, well: a tunnel in Seattle cost three times as much as one in Paris and seven times as one in Madrid. This is not an oddball, this is how it is.  Infrastructure investments in the US now cost multiple times what it does abroad, and these are in nations where labor and environmental concerns are being taken seriously.

So, what is going on here? The very bright and knowledgeable Rampell confesses that not only does she not know, but she cannot find anybody who can explain it. In a way this looks like the high costs of medical care in the US.  This is  a much more politicized matter, but when one digs seriously into the research there seems to be no single reason, a whole series of matters, not easily resolved.

The issue of infrastructure lacks some of the matters healthcare has, such as how the US is the only nation in the world not having universal healthcare, which many of us think would lead to lower healthcare costs for various reasons. But what is responsible for the now high costs of infrastructure investment in the US, some of the obvious culprits there for healthcare are not there.

Your money or your life. Highway robbery has been around since. On the high seas, was known as piracy. Been writ that pirates didn’t always even offer the choice. All made for generations of good bedtime reading for youth. And, for mock sword, and bow and arrow, fights. And, really bad movies. Thanks, Howard Pyle, Robert Louis Stevenson, …, and Walt Disney. No thanks, Errol Flynn.

These days, it’s neither sword nor bow and arrows, musket nor cannon. It’s malware. Goes by cyberattack or ransomware attack. A malware fight? Has no lilt. Aargh! I’ve been hit by a virus.

First, there had to be computers. Ransomware showed up; around 1980, about the time computers got really going. By floppy or tape, then. Your cashier check or you crash. No panache; besides, too easy to trace. 1983, cryptographer David Chaum came up with the idea of electronic money. In 1995, he came up with digicash, which was untraceable.

Then, came 2008. Digital currency, most often known as bitcoin, was born out of the 2008 financial crisis. Obviously, something needed to be done about banks. Fair to say that those most knowledgeable were compromised, so it fell to those with lots of imagination and little actual knowledge. As a first attempt, these less than knowledgeable came up with a combination of butter churning and mining by computer which they dubbed bitcoin, or cryptocurrency.

Others, with some imagination of their own, saw bitcoin as an opportunity. Amongst them were ransomware hackers. Now it was by email, your bitcoins or your data. Bitcoins were pretty much untraceable. Russia, for a small fee, provided the Sherwood Forests, the Caribbean Isle. Voila, for a small fee, capitalism provides the likes of GroupSense to negotiate with the hacker.

Keep the good and throw away the bad. Some, like Sen. Elizabeth Warren, see ways that digital currency could solve some of the problems inherent banking, such as access, overcharging, …. Liz had a lot to say about the bad aspects.

Industrial production on the verge of exceeding pre-pandemic level

Industrial production is the King of Coincident Indicators. It is the single datum that most frequently coincides with the NBER determination of the beginning and end of recessions.

In May, total production increased +0.8%. Manufacturing production increased +0.9%. Both current readings are the highest since the onset of the pandemic:

Figure 1

Total production is only 1.4% below its February 2020 level, and manufacturing production is a mere 0.3% below that level.

If there is another positive report next month, exceeding the February 2020 level, and Q2 GDP is as positive as has been forecast, then the NBER may well decide that the pandemic recession has officially ended (with the most likely trough date being set at April of last year).

by Joseph Joyce

Measures of Global Income

The difference between the income generated by the domestic production of goods and services and the income received by the residents of a country is the basis of the distinction between Gross Domestic Product (GDP) and Gross National Income (GNI). The latter measure includes net foreign-sourced income, the income domestic residents receive from foreign sources for providing productive resources (such as labor) minus the income paid to foreign residents in exchange for their productive resources. Net foreign income is also called “net primary income,” and is a component of the current account of the balance of payments. However, GNI and net primary income exclude one form of income from the foreign sector that has become increasingly important: personal transfers, also called remittances.

The two measures do include the wages paid by foreign firms to domestic workers who travel across borders to their place of employment. But the determination of who is a “domestic worker” depends on residency, not citizenship, and residency can be an ambiguous concept. The IMF’s Balance of Payments and International Investment Position Manual formulated a criterion for establishing it:

“A household is resident in the economic territory in which household members maintain or intend to maintain a dwelling or succession of dwellings treated and used by members of the household as their principal dwelling. Being present for one year of more in a territory or intending to do so is sufficient to qualify as having a principal dwelling there.”

May Retail Sales Fell 1.3% After April Sales Were Revised 1.4% Higher

Seasonally adjusted retail sales fell 1.3% in May after retail sales for April were revised 1.4% higher . . . the Advance Retail Sales Report for May (pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $620.2 billion for the month, which was a decrease of 1.3 percent (±0.5%) from April’s revised sales of $628.7 billion, but 28.1 percent (±0.7 percent) above the adjusted sales of May of last year . . . April’s seasonally adjusted sales were revised from the $619.9 billion reported last month to $628.7 billion, while March sales were revised from $619.8 billion to $623.12 billion, which meant that March to April percent change was revised from virtually unchanged (±0.5%) to an increase of 0.9 percent (± 0.2 percent) . . . the $3.3 billion upward revision to March sales should increase nominal first quarter PCE at around a $13 billion annual rate and add about 0.23 percentage points, give or take, to 1st quarter GDP when the 3rd estimate is released at the end of the month . . . estimated sales before seasonal adjustments, which were extrapolated from surveys of a small sampling of retailers, indicated sales actually rose 3.0% before the adjustment, from $625,636 million in April to $644,362 million in May, while they were up 27.7% from the $504,607 million in actual sales of May a year ago . . .

Included below is the table of the monthly and yearly percentage changes in sales by business type taken from the Census pdf . . . the first double column below gives us the seasonally adjusted percentage change in sales for each type of retail business from April to May in the first sub-column, and then the year over year percentage change for those businesses since last May in the 2nd column; the second pair of columns gives us the revision of last month’s April advance monthly estimates (now called “preliminary”) as revised with this report, likewise for each business type, with the March to April change under “Mar 2021 r” (revised) and the revised April 2020 to April 2021 percentage change in the last column shown . . . for your reference, our copy of the table of last month’s advance April estimates, before this month’s revision, is here . . .

May retail sales decline, but 10%+ gain in retail sales since the onset of the pandemic remains intact

[Note: I’ll comment on industrial production in a separate post later]

I feel like I could simply repost my retail sales piece from one month ago, because the story is the same: at first glance, May’s retail sales report, like April’s, looks like a big miss, as sales declined -1.3% nominally, and after adjusting for inflation, declined -2.0%.

But the important point is that the big jump in March didn’t get taken back.  As I wrote then: “if the big March gain in sales isn’t taken back in the next month or two, then there’s likely to be a similarly large jump in employment by the end of summer.” Further, I have fully expected the big jump in sales and income fueled by stimulus payments to peter out. In fact, some significant declines for a few months might actually be a *good* thing. Let’s take a look, and I’ll explain why.

Here are nominal retail sales since the modern series started in 1994:

Figure 1

The Cornwall Paradox

 The County of Cornwall has been in the news as the site of the G7 summit, just ended. In today’s Washington Post an article “In Cornwall, a jarring contrast of power and poverty,” by Karla Adam and Loveday Morris, a paradox of this visit is highlighted and brought out, indeed, that Cornwall is one of the poorest places in Great Britain, indeed in Northern Europe more generally, but that it is drawing much attention and some money, if not necessarily what it most needs.  

A deep part of this paradox is that Cornwall was probably the part of Britain that got more per capita aid from the EU than any other, certainly as much as any other, due to its poverty, but also was one of the most strongly supportive of Brexit, with much of this driven by a dislike of EU fishing regulations, but now with Brexit in place the Cornish fishers discovering that the gains they imagined getting from leaving the EU and its regulations are simply not there, including unsurprisingly because they are now blocked substantially from selling the fish they do catch to the EU.

A part of this particular moment is that UK PM Boris Johnson was the main leader of the Brexit effort and is also apparently half Cornish, from his father’s side.  So he is personally aware of the gains and losses and attitudes there, and his desire to help Cornwall was why he chose to have the G7 summit there this year when UK was the host.  It apparently is bringing in money and attention, although probably not all that much to the third of the young population that is officially poor.  The booming industry seems to be tourism, but people coming in buying second hones are driving up housing prices for the locals, whose other industries have been in decline, the last tin mine closing in 1998 after many centuries of operating.

Record High Job Quitting; Record Low Layoff Rate, MarketWatch 666, AB Commenter and Blogger RJS

The Job Openings and Labor Turnover Survey (JOLTS) report for April from the Bureau of Labor Statistics estimated seasonally adjusted job openings jumped by by 998,000, from 8,288,000 in March to 9,286,000 job openings in April, after March’s record job openings were revised 165,000 higher, from 8,123,000 to 8,288,000 . . . April’s jobs openings were up by 37.5% from the beginning of this year, and also more than double the 4,630,000 job openings reported for April a year ago, as the job opening ratio expressed as a percentage of the employed rose from 5.4% in March to 6.0% in April, and it was up from 3.4% a year ago . . . the greatest percentage increase in April job openings was in the accommodation and food services sector, where openings jumped by 349,000 to 1,338,000, while job openings in private educational services services fell by 23,000 to 883,000… (details on job openings by industry and region can be viewed in Table 1) . . . like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked to at the end of the release . . .